It has become readily apparent to even the most casual observer of the global economy that we no longer have the right, option or privilege, as individual nations or even as states in those nations, to enact currency, monetary, and economic policy myopically and individually. Whether we are willing to admit it or nor, our actions at the local level affect the entire planet. What you do affects me, and what I do affects you. If one state enacts protectionist policies for a particular industry or for their currency, then the other states are directly and irrevocably impacted by that decision. We know this to be true. It is obvious and undeniable. Yet, we still choose to act as if we are alone in the world.
We can not make economic and monetary decisions in isolation from the world as if we are the only important people on earth. If you devalue your currency, someone somewhere on the planet will be affected. If you manipulate exchange rates or the price of products and services or tweak your national central banking policy for the sole benefit of your state alone, without concern for the impact your decisions have on the other states of the world, then chaos ensues for the planet and wildly oscillating economies are the result and many people loose their livelihoods somewhere on earth.
It’s time for a new way of thinking about our responsibility to each other collectively. And not just for ourselves selfishly with individual national protection, greed and avarice as motivators, but as a world inescapably trending toward economic, if not political and social unity. The instantaneous communication and connection we can have with virtually any person on the planet has destroyed the great wall of isolation we once felt at our physical borders. Those days are gone. Yet, the economic and political isolation remains, if not somewhat tenuously. A look into the past to the founding of the US may offer solutions applicable to our world today.
Separately, we struggle to overcome economic challenges within our individual state borders. We suffer the negative consequences of wildly fluctuating currencies, reserves, stability and employment because our local economies are not isolated and independent from the rest of the states around the world and will never be such again. So how do we make the global and thus the local economy more stable and successful and prosperous for all the people of the world since we can not escape the rapidly growing common connection we have with that world?
Today, we must make decisions that are in the best interest of our state and world jointly with each other since we are essentially becoming nothing more than member states of our larger planet. We can no longer act alone or even pretend to be isolated from the rest of the world. This scenario of isolated decisions made on the basis of state sovereignty brings to mind the way the various states of the US, and many banks around the country for the first two centuries or so, and some powerful individuals of that time, who wanted those states and local banks to have sole authority over their individual currency, monetary policy and local economy, behaved as autonomous and distinct members of the US, as if they were members of an association of states with no real national identity. The US as a nation could not nor would not prosper and grow as long as each state pursued independent goals. Only when the various states of the US and certain powerful private banks gave up some of their separate banking, economic and financial authority to strengthen and empower a strong central bank (the Fed today) with a single national currency, showing longer term foresight, national unity and identity, did the US became a major economic player in the world.
Since the ties that bind the states of the world are growing stronger day by day rather than decreasing, and due to each state having certain integral advantages and disadvantages arising from their particular resources (human or natural), and due to the exponential improvements in communications, computing and transportation technologies, the trend toward increased ties with other states will only continue, grow and strengthen. One of America’s founding fathers authored a solution that saved the US from perpetual chaos and potential dissolution and made it one of the greatest economic powers in the world - though the process was turbulent as different political leaders moved the country one way or another. That solution, which was proposed by Alexander Hamilton, may be the system that could save the world too. It brought together the US, and ultimately helped strengthen our national identity. It could do the same for the world today since the earth is basically in the same position as the early US.
It is only natural that if you and your state can provide or produce something more efficiently, while maintaining the quality, at a lower overall cost, then you will and should do that thing. That is the simple truth of a market driven free market economic system. This obviously causes challenges for those who once were doing those things, but aren't now. This situation exacerbates not just the economic balance between states, but puts enormous pressure on currencies and the balance of reserves between those nations when the various states have their own distinct and separate currencies and monetary policies supporting those currencies, and when no two currencies and policies are the same. How then can we encourage, foster, and equitably shape global growth and prosperity for all the worlds people given the fact that our connections are growing irrevocably stronger in an environment which is presently chaotic and disjointed? How can we bring prosperity and stability to our individual states while promoting and ensuring long-term growth and stability for the world when each nation has its own central bank and its own currency and monetary policies just like the US in its early days? Do we let the current system continue, or do we pursue a proven and better option?
The system developed in the early days worked so well that in a relatively short period of time, the creditworthiness, financial stability, and cash reserves of the new US were improved dramatically, however fleetingly that was as the US went through various political permutations. The new nation was seriously in debt after the Revolutionary War. The new central government had borrowed money from numerous individuals, states and European nations to finance the war effort. If the US was to survive and prosper and not disintegrate, a way needed to be created to repay those debts while ensuring the success and ultimate inescapable unity of the nation. A viable system was developed within four years of the nations founding that was to be the basis of the financial success of the United States for years to come and would improve the nations creditworthiness, financial stability and cash reserves. Even though the system proposed in 1790 was to ultimately pass the tests of time, it had its’ supporters who would follow the system and its’ detractors who had less effective, and more often than not, destructive, views and ideas. In the end even the detractors finally realized the logic of Hamilton’s Plans and implemented them in one form or another.
There are those today who refuse to admit that Alexander Hamilton is the father of modern American success. Hamilton promoted a strong central government with a central bank owned mostly by individuals, and believed that the US Constitution was a living dynamic framework from which the people could grow the new nation into a better system. His interpretation of the constitution has been repeatedly vindicated by the US Supreme Court-though many still challenge that view. Hamilton’s plan worked. Maybe, just maybe, we can use Hamilton’s system to bring stability, measured growth, and prosperity to a world that is basically one no matter what some may think in these times where currencies are being fought over and trade and reserve imbalances consume the minds of our leaders and the average person, and wars and violence permeate regions and peoples of the world. Hamilton’s plan is no panacea, but it is a viable and obviously successful place from which to start.
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